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Market Commentary 15/07/16

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EUR/USD – Large Drop After Testing Bank Area

Yesterday the market rose into an area where we knew the bank traders had placed sell trades in the past, after falling back out of the area in the form of a large bearish candle it seemed likely that the banks had placed more sell trades although this could not be confirmed as the low of the move had not been broken.

This afternoon has seen the market drop considerably after moving back towards the highs of the drop which we saw when the market fell out of the area where the banks had placed trades in the past. The low which I marked has also been broken suggesting more downside next week.

For now all we can do is wait for more price action to develop, as it stands there isn’t any levels for us to use as a means of entering short trades, it would have been possible to use some of the broken lows seen on the move up as breakout zones were it not for the fact so many of them formed which makes it impossible to determine which is likely to causes a reversal.

USD/JPY – Approaching Important Swing High On The Daily Chart

USD/JPY has continued to rise after retracing from the high made yesterday, the market is now in close proximity to the swing high created when Britain announced it’s exit from the EU.

Today’s move higher has created a demand zone just below the current market price. I would keep an eye on this demand zone because if the market is to break the swing high it’s likely to fall a little first, the fall may end at this demand zone and we might be able to get a long trade placed which we can hold as the market breaks the high.

If the high does end up being broken then further up-movement is likely to take place over next week.

AUD/USD – Falling After Making New High

Today AUD/USD was able to break through the high made a couple of days ago but it seems like this was just a ploy to get retail traders to enter short trades so the banks can get their own sell trades placed into the market.

We can see the new high was made after a large bullish candle formed. A Bullish candle like this would have caused a large number of retail traders to enter long trades even without the break of the previous high. When the high was broken the banks came into the market and placed sell trades, the price then fell slightly before moving back up towards the point where the banks had placed their trades.

Another much larger drop then took place and is currently pushing the price down as we speak, this drop has caused a supply zone to form at the top of the move low and has also caused a breakout zone to form due to the lows which had been broken by the fall.

On Monday I would watch the breakout zone for entries short, I think the market is too far away from the supply zone for it to return but I’m confident we will see a retest at the breakout zone sometime next week.

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